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Monday, April 22, 2013

Here is an update of our gold chart of 25th of March 2013. Gold have declined into even more oversold territory since then and is now more than two standard deviations from the mean. Usually following these historically low gold has usually rallied.

Gold ended a 20 year decline around 2000. This is the most oversold conditions since then.

Click on the image for larger picture. Source: Bloomberg

Year over year going back the last decade, gold's move is -2.6 standard deviation change. This price action puts the price of gold into rare uncharted territory. Also notice the Gold Shares ETF "GLD". The latest decline was 8 standard deviations which is historically rare.

The downside potential should now be be limited. Expect a rally soon back to the mean.